VICTORIA — Six years ago the B.C. Liberals pressured provincial health authorities into joining a contract with giant IBM to supply thousands of workstations and related computer services for hospitals and other facilities.

The deal would end up costing taxpayers hundreds of millions of dollars over the better part of a decade, never mind a lack of due diligence on the part of the government boosters of the scheme.

Onboarding the Liberals call it, as in getting on board with service delivery from outside suppliers or — more to the point — climbing on the privatization bandwagon without asking too many questions.

For that is pretty much how things unfolded at a December 2010 meeting between representatives of the six authorities and the government agency in charge of promoting shared services in the health care sector.

It’s all there in a report released Thursday by auditor general Carol Bellringer, the latest in her series of exposes on the government’s dubious handling of contracts with outside suppliers of information technology.

Bellringer discovered in her investigation that one unnamed health authority did balk signing on to what was effectively a fait accompli, the workstation contract with IBM having been negotiated several years previously to cover government ministries.

“There was uncertainty on what the costs will be,” the health authority complained. The benefit to taxpayers was unknown. They were not clear what they were getting from IBM. They wanted to see a business case.”

Nor were those concerns ever satisfied. “The shared services agency was unable to answer the health authority’s questions,” according to the auditor general.

Nevertheless the deal went ahead, albeit with one abstention and one “no” vote from health authority representatives.

Bellringer pegs the total payout by taxpayers — going back to the original contract signing in 2004 and all the extensions going forward to 2017 — at $1 billion. Yet for all that the Liberals didn’t know what they didn’t know.

“Overall, we found that government’s analysis didn’t show that adding the health authorities to the contract would result in value for money for taxpayers,” writes Bellringer. “Its own preliminary analysis showed unlikely cost savings for the health authorities. Throughout the process, decision-makers, especially health authority CEOs, didn’t have enough information to make a fully informed decision.”

Regrettable that the public is only learning about all those shortcomings so long after the fact. But as Bellringer also reported, “this audit was challenging and hard to deliver in a timely manner largely due to poor records management and high staff turnover with those we audited. Working with multiple organizations that typically work independently of each other exacerbated the challenges of an already complex topic.”

She also found a shocking lack of written records and documented justifications from either the shared service agency or the overseer ministry of technology.

“Neither provided us with evidence that they conducted a thorough analysis to determine whether onboarding was a better option than initiating a new procurement process. The evidence they did have suggested there was a high risk (it) would result in cost increases for the health authorities. Despite this risk, they did not explore alternatives.”

The shared services agency was also supposed to conduct a legal analysis of the deal, identifying potential liabilities, conflicts of interest and policy clashes.

“The legal analysis was not documented,” reports Bellringer. “The agency did not give us any formal documents that would demonstrate its due diligence. They also informed us that the analysis was provided verbally to decision-makers. The failure to document important analysis and key decision points that would justify a decision to spend hundreds of millions of dollars is poor practice.

“Public organizations should be able to demonstrate what they are doing and why,” she continued with undisguised exasperation. “They should expect to be tested by members of the public, media, the courts and others. In addition, this information is critical for management to preserve corporate knowledge, to inform future decisions, and to reflect on lessons learned.”

Yet her investigative team turned up no evidence that the Liberals had incorporated those obligations into their decision-making. “There were no expectations in place regarding the required financial and legal analysis and no requirements for an independent review of the decision or the supporting evidence prior to approving the onboarding and extension of the contract.”

The auditor general also uncovered the rationale behind this wilfully neglectful approach, namely “a strong belief that the expansion of alternative service delivery contracts to the broader public sector would result in cost savings.” Believing it to be so, the Liberals apparently saw no need for due diligence in producing business cases, legal analysis or even proper documentation for the decision.

In response to Bellringer’s findings, the government predictably took refuge in the long delay between the events chronicled in the report and its release. Recommendations welcome, but many of these problems have been addressed. New controls in place, need for oversight already recognized. And so on.

But after several go-rounds with the Liberals on the information technology file, Bellringer is not so sure.

“This could happen again” she cautioned. “There are currently 12 similar contracts reported to be worth over $6 billion, and government is looking for opportunities to expand them.”

Plus, as the auditor general’s report documents all too well, these outsourcing schemes have been driven by ideology more than clear-headed analysis and due diligence on behalf of taxpayers.

Comments

We encourage all readers to share their views on our articles and blog posts. We are committed to maintaining a lively but civil forum for discussion, so we ask you to avoid personal attacks, and please keep your comments relevant and respectful. If you encounter a comment that is abusive, click the "X" in the upper right corner of the comment box to report spam or abuse. We are using Facebook commenting. Visit our FAQ page for more information.

Almost Done!

Postmedia wants to improve your reading experience as well as share the best deals and promotions from our advertisers with you. The information below will be used to optimize the content and make ads across the network more relevant to you. You can always change the information you share with us by editing your profile.

By clicking "Create Account", I hearby grant permission to Market to use my account information to create my account.

I also accept and agree to be bound by Postmedia's Terms and Conditions with respect to my use of the Site and I have read and understand Postmedia's Privacy Statement. I consent to the collection, use, maintenance, and disclosure of my information in accordance with the Postmedia's Privacy Policy.

Postmedia wants to improve your reading experience as well as share the best deals and promotions from our advertisers with you. The information below will be used to optimize the content and make ads across the network more relevant to you. You can always change the information you share with us by editing your profile.

By clicking "Create Account", I hearby grant permission to Postmedia to use my account information to create my account.

I also accept and agree to be bound by Postmedia's Terms and Conditions with respect to my use of the Site and I have read and understand Postmedia's Privacy Statement. I consent to the collection, use, maintenance, and disclosure of my information in accordance with the Postmedia's Privacy Policy.